Delphi, GM agree to new deal on transfer of pensions

NEW YORK -- Delphi Corp. and General Motors Corp. said Friday they have reached a new deal on the automaker's role in Delphi's bankruptcy exit, including the transfer of employee pensions.

Under the new deal, GM's financial support of Delphi's emergence from court protection has grown to $10.6 billion, up from $6 billion in an earlier plan.

The automaker will now take on $3.4 billion in pension obligations for hourly workers, instead of the $1.5 billion that was predicted earlier.

Delphi will seek court approval for the proposal Sept. 23. It said adopting the new agreements with GM was necessary to help it emerge from court protection as soon as possible.

The deal announced Friday fends off the government's pension insurer, which threatened to file a $900 million claim against Delphi if the companies didn't move forward with a plan to transfer hourly pension obligations to GM.

Delphi was GM's parts-making unit until a 1999 spin-off.

The deal settles issues between Delphi and its former parent as the supplier reformulates its reorganization plan.

An earlier plan included the participation of a group of equity investors who had planned to inject up to $2.55 billion into the company. That deal fell through in April when the investors backed out.

Troy, Michigan-based Delphi has been operating under bankruptcy protection since October 2005.